Wallenberg used his diplomatic powers to help thousands of Jews flee Nazi-controlled Hungary during World War Two. But after the Soviets entered Budapest just before the end of the war, he was jailed in the notorious headquarters of the secret police in Moscow, where he died.
Wallenberg's niece Marie Dupuy in July launched a legal case against the FSB – the successor of the Soviet-era KGB – to force it to drop its refusal to release the full archive on the diplomat.
The move was the latest twist in the family's decades-long battle against Moscow to find out the truth about what happened to Wallenberg.
"Up to now a whole number of circumstances of his presence in a Soviet prison remain unknown," Darya Sukhikh, a lawyer for Dupuy, told the Meshchansky district court in Moscow.
"His fate still bothers not just his family but quite a few people."
The USSR in 1957 made public a document saying Wallenberg died of heart failure in the Lubyanka prison in July 1947.
In 2000, the head of a Russian investigative commission said Wallenberg had been shot and killed by the secret police, but gave no specific details.
Sweden officially declared Wallenberg dead in 2016.
An FSB representative on Monday asked the court to reject the latest demands in part because it said the archives include details about the "personal life" of other Lubyanka inmates.
The documents from 1947 can only be made available in 2022 after an official 75-year waiting period to declassify the documents has passed, the FSB said.
"You can wait for these deadlines," he told the family.